To see how companies performed within the industrial sector in 2022, Ayna AI examined the performance of industrial companies traded on major US and Canada exchanges (NYSE, Nasdaq, NYSE America, Toronto, and TSX Ventures) and reporting revenues greater than $100 million in the years 2020 to 2022. For the 800 companies meeting these criteria, we analyzed shareholder returns and operational and multiples performance during 2022. Overall, it was a tough year for the sector, but we found bright spots for some micro-verticals and companies.
To honor the year’s high performers, we identified Ayna Awards in five categories. We call these winners Salmons, Raptors, Hard Hats, Ascensionists, and Accumulators.
Industrials companies overall struggled in 2022. Their total shareholder returns (TSRs) were below average, falling 25 percent, relative to an average TSR change of −22 percent for public markets in the United States and Canada (Exhibit 1). In addition, fewer companies in the sector beat consensus estimates in 2022. For example, the share of companies beating consensus forecasts for revenue fell from 58% in 2020 to 55% in 2021 and 48% in 2022, and the share exceeding consensus estimates for FCF per share fell from 43% to 30% to just 22% over the same three-year period. Meanwhile, in both 2021 and 2022, 39% of companies exceeded expectations for return on equity—the only measure not showing a decline in the share of companies exceeding consensus forecasts.
Further, their operational performance declined. Revenue growth was 13 percent in 2022, down from 22 percent in the prior year, and EBITDA margins shrank by 159 basis points, compared with expanding 251 points in 2021.
Not everyone suffered the same fate. We divided the total sample into 57 micro-verticals and de-averaged the results to identify performance variations. The best-performing 23 percent of micro-verticals generated positive shareholder returns (Exhibit 2). Overall, the gap between the top and bottom performers was about 14,000 basis points.